On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-5681-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Rodríguez, Reisner and Yannotti.
Bentley Laboratories, L.L.C., (Bentley) appeals from a February 5, 2009 judgment following a jury trial, in favor of its former independent sales representative, Charles Hart, Jr. The judgment awarded $49,944 in compensatory damages, $5,492.55 in prejudgment interest, and $77,419.50 in counsel fees, pursuant to the Sales Representatives' Rights Act (SRRA), N.J.S.A. 2A:61A-1 to -8. Bentley also appeals from the dismissal of its counterclaim against Hart at the close of all evidence. We affirm the dismissal of the counterclaim and the awards of compensatory damages and prejudgment interest, but reverse the award of counsel fees.
This a summary of the relevant evidence. Bentley manufactures liquid and cream products for private label brands in the cosmetics industry on a contract basis. Brian Fitzpatrick was Bentley's president. Hart agreed to become one of Bentley's sales representatives. Per industry standard, the proposed compensation arrangement was that Hart would pay his own expenses and receive his commissions after Bentley was paid by the customer. However, Fitzpatrick testified that "[Hart] kept saying to me, you know, this is my only source of income, I'm totally going to be representing Bentley . . . there's nothing else, no other way for me to get any money or achieve any income outside of Bentley." Hart requested health care benefits. Because Fitzpatrick believed that Hart "was going to be working exclusively and dedicated to us," he "was certainly willing then to contribute to [Hart's] personal cash flow so that the arrangement could work." As "a significant concession," Fitzpatrick agreed to pay Hart on the purchase orders, rather than when Bentley was paid, but Fitzpatrick "wanted to be sure that it was real clear" that this would be renegotiated after twelve months. Fitzpatrick also agreed to pay for Hart's health insurance. Hart and Fitzpatrick signed a contract, which allowed either party to revoke the agreement "at any time upon a 30 day written notice." At trial, Hart insisted that the contract was not an exclusive arrangement and that he remained an independent contractor, permitted to sell other companies' products. He said he would not have signed the agreement if it had been exclusive.
Fitzpatrick and Hart created a list of companies to ensure that none of Hart's accounts would be pursued by Bentley's other sales representatives and vice versa. The list was attached to the contract between Bentley and Hart as "Exhibit A." Included on Exhibit A was a company called CCA Industries (CCA). After Bentley provided CCA with samples it had created for CCA's products, it received purchase orders from CCA for five or six products.
Several months later, Hart asked Fitzpatrick if he would "mind" if Hart facilitated a transaction for a company that manufactured a product Bentley did not produce. Fitzpatrick objected because he believed "it would divert [Hart's] time and attention from our business." According to Fitzpatrick, Hart agreed.
Fitzpatrick testified that, "the arrangement" between Hart and Bentley worked "very, very well" and he was "very happy." Hart agreed. He earned $88,000 in commissions the first year. At Hart's one-year anniversary, he and Fitzpatrick began to modify the contract for renewal. They agreed that commissions would be paid ten days after shipment of the product. Hart asked to remove any provision for business expenses, because he intended to incorporate as a limited liability corporation and wished to take advantage of available deductions. Fitzpatrick agreed. Fitzpatrick testified that he repeatedly presented the written contract for Hart's signature, but Hart wanted his attorney to review it. According to Hart, the new contract was never signed because he disagreed with several of the terms. Nonetheless, the changes were implemented effective July 1, 2004, without a signed contract.
In September 2004, Bentley's corporate headquarters received a request for a quote for products for CCA's Denise Austin cosmetic line. Dana Weiss, CCA's purchasing director, testified that he sent the request to Hart's attention based on CCA's "understanding that he was a representative of [Bentley's]." Bentley submitted its quotes through Hart. The bid was "pretty significant" to Bentley. CCA indicated that the product line "was going to be very fast track," with a launch scheduled for the first quarter of 2005. At trial, Hart testified that there was "no way" that Bentley had the "capacity" to do the entire job under those time constraints.
Hart delivered hard copies of Bentley's quotes to CCA. When Fitzpatrick asked Hart about the status of the bid, Hart said that CCA was "still waiting to get other bids in." However, Fitzpatrick learned from Hart "sometime in early January" that Bentley did not get the business. Hart mentioned another company called "RMJ" and told Fitzpatrick that "they just took it on price."
In fact, unknown to Fitzpatrick, Hart also had a signed contract with CCA that would compensate him for his representation of the Denise Austin line. According to Hart, Drew Edell, CCA's owner, had asked him to find a manufacturer for CCA's "entire line" of Denise Austin cosmetics. On January 3, 2005, Hart signed a contract with CCA that compensated him for a deal he made for Medicia, a direct competitor of Bentley's, to manufacture some of the Denise Austin products. At trial, Edell denied Hart's claim that CCA had asked Hart "to shop around the quotes for the Denise Austin line." Rather, Edell testified that Hart had approached CCA and offered to facilitate a relationship between CCA and Medicia. Hart told Edell that he "was no longer representing Bentley and [was] acting on an independent [basis]."
David Del Pizzo, vice-president of sales for Medicia, testified that Hart contacted him in the summer of 2004 to ask if Del Pizzo would "be interested" if Hart were able to bring "some CCA business to Medicia." Hart told Del Pizzo that he represented CCA "as a broker." Del Pizzo refused Hart's "numerous" requests to be compensated by Medicia, because Hart admitted to Del Pizzo that he was being compensated by CCA. However, Hart assisted Medicia in its bid. Medicia sent Hart its quote for the Denise Austin line at Hart's Bentley e-mail address. Soon afterward, Hart notified Del Pizzo that Medicia was the successful bidder for two of the Denise Austin products. Medicia's quotes on those products were higher than Bentley's.
Hart and Fitzpatrick met at Bentley's office on February 9, 2005. At trial Hart and Fitzpatrick offered very divergent views of the meeting. Hart testified that he never notified Fitzpatrick that he was terminating their contract. Fitzpatrick testified that he told Hart, "[Y]ou're obviously unhappy here . . . . What is it you want . . . [what] would [you] like to see happen with the business relationship?" Hart's answer to that was, "I want to end it." But according to Fitzpatrick, Hart "wasn't actually resigning at that meeting." Hart asked about his commissions. Fitzpatrick told him that he would not be entitled to any if he resigned. He told Hart, "[Y]ou think about what you want to do and I'll think about, from our perspective[,] what we could do in terms of some kind of a compensation. ...